The Chrysler reorganisation saga is entering a new stage next week with US bankruptcy judge Arthur Gonzalez beginning his hearing on May 27 to decide whether the carmaker's assets will be sold to Italian automaker Fiat.
Many of the dealers who are losing their dealership are expected to object during a May 27 hearing on the sale of Chrysler assets to the new company.
Gonzalez has already approved up to $4.96 billion in US and Canadian government funds for Chrysler to reorganise its functions and pay lawyers, financial advisers and some suppliers.
Meanwhile, the US Treasury has named C Robert Kidder, the former chairman of Borden Inc. and Skybus Airlines, as chairman of the new Chrysler. He will replace the present chairman and CEO, Robert Nardelli; but Kidder will take only the chairmanship.
Fiat CEO Sergio Marchionne will be the CEO of the new Chrysler.
Kidder is one of the four directors of Treasury's choice. Of the total nine directors to be selected, Fiat will select the remaining three, and a board representing a retiree health trust fund for UAW workers and the Canadian government will get one director each.
One of Kidder's major tasks will be to inspire confidence in Chrysler dealers.
On 14 May, Chrysler asked court permission to cancel 789 car dealership agreements, about a quarter of its estimated 3,188 retail outlets, as the company finds it increasingly difficult to overcome the ongoing crisis. (See: Auto industry woes drive up US unemployment rate).
Those rejected dealers have about 44,000 vehicles that Chrysler wants to redistribute to surviving dealers.
Steven Landry, executive vice president in charge of sales and marketing, Chrysler defended the company's policy saying that the paring was necessary.
''The industry cannot support the current number of dealers and "the reality is Chrysler's viability depends on a vibrant, profitable dealer network,'' he said.
In 2008, Chrysler dealerships did not make a profit. The average loss was $3,184 per dealer.